Icon8888 sifu.. any comment for this upcoming QR result.... should be quite positive right ??? since the share price start reacting ... up 10 cent so much today...
price keep ondroping ,how to issue right.not a good time.management pls improve your quarterly report.pls dont keep on asking money from the minority shareholder.
Keep on? AFAIK they have never done a rights issue. Also quarterly is down heavily due to one-off corporate exercise expenses (maybe again some more for the rights issue, previous one is for name change).
Might be a good long-term play. But I am more interested in buying in at a cheaper price.
Good prospects most likely. Management knows something is up. They sapu the shares in the open market slowly and they have given their commitment to the rights issue, even though the rights issue is not necessary since CWG has ample FCF, sufficient working capital and an adequate current ratio. Net gearing at 0.35X.
So ask yourself...why management so syoik to rights issue? They know more than us...they want to increase their stake at the expense of the small holder. They probably foresee that costs are under control.
I might enter to test my theory above, but only at roughly 0.45 cents to give myself some room for error in judgement.
niki,what the good newthat you willing to subscibe CWG right.unless they change their business in future or may be target for take over due to so cheap price.the right issue only for repay long term loan & operation cost
sapurakencana, I believe the rights issue is unnecessary in the normal course of business. CWG's financial ratios, balance sheet and net debt/net gearing have all improved over the past few years. Profitability is increasing.
As such, to me, the rights issue is a very fishy move. If you read the financial statements, it seems they want to sell Arto to European market in larger quantities. This requires a larger working capital, which they will fund from this rights issue. Arto also promises higher profit margins given its premium product status.
Prior to the rights issue, one of the Director's and the Chairman's daughter have been aggressively buying shares from the market. It's either they are doing it to support the share price to ensure the rights issue takes place, or it is because they want to increase their stake because they know business will be better.
The Executive Director (with merely 14% ownership at present) has pledged to subscribe to 52% of the rights issue...again, this tells me that he knows something good is coming.
As far as I am concerned, my entry price is RM0.505. The book value per share ex-rights issue should be at around RM0.62-RM0.63. This means I buy in at P/BV of around 0.8x, which is an undemanding valuation. From a P/E ratio perspective, once you strip out one off expenses (and without factoring in future interest expense savings), I am buying in at a P/E of 8x...again very reasonable for a company that could very well experience growth of 15-25% in its bottomline annually over the next 3-5 years.
Yes, this requires some amount of extrapolation and confidence in the future of the business, but I believe I have created a sufficient margin of error for myself. CWG's product are of a good to decent quality. We have all used or seen their exercise books. Management is heavily invested in the company. Financials are improving. Valuations are undemanding. I see little downside risk, and substantial upside risk with the chance of this being a multi-bagger over the next 3-5 years.
Alas, time will tell if my investment thesis proves to be right.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Icon8888
18,658 posts
Posted by Icon8888 > 2017-02-03 09:24 | Report Abuse
One for one split (share swap par value RM1 into 2 RM0.50 shares) followed by rights issue
Will they ram up share price to attract rights subscription ?
I am speculating on this
Anyway coming quarter should be super good due to strong USD